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Economic fears hit retailer stock orders

The global economic slowdown is applying more pressure on videogames publishers as retailers in the US slash their stock orders.

In a bid to limit any risk of piling up unwanted inventory - if consumers stop buying games - all five key retail chains in the territory have started to cut their day one orders, causing growing concern among the publishing community.

That's according to Sega Europe president Mike Hayes, who told GamesIndustry.biz that although Europe isn't quite in the same position, it's another headache for the industry to have to deal with.

"Retailers, definitely in the United States, are being far more prudent in what they buy, so they're clearly going to focus on the triple A titles, but their day one orders are coming down," he said. "What they're saying is that they'll take in as little as need to, see how it sells through, and then they know they can order again in a matter of days if not hours. So that's hurting us.

"In the United States you've got five customers, and those customers are saying that they don't need to order four weeks' stock, I'm going to order two. I don't want all this inventory. I think you'll find most publishers in the United States will be having similar challenges, to be honest.

"But Europe is such a mosaic of opportunities - while all the retailers are being more aggressive, and we understand why, Europe's a much more fluid and flexible market to manage, so we're in a good position."

A fall in stock orders is the latest issue to hit the publisher-retailer relationship, following a greater take-up of second-hand game sales by retailers in North America and Europe as well as a push into game rentals, while publishers look more closely at direct sales via digital distribution.

I expect publishers and PC gamers to start moving towards digital distribution systems similar to what Valve and Blizzard offer. This type of content delivery also allows for dynamic pricing of games which would better reflect the value and age of a game leading to higher demand. That still leaves the console and casual gaming markets for brick and mortar stores.

Edited 1 times. Last edit by John Amirrezvani on 26th January 2009 10:07pm